TAXATION RULING NO. ST 2210

ST 2210

SALES TAX : CLASSIFICATION OF SUPPLEMENTS, ENCLOSURES AND INSERTS IN NEWSPAPERS.

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FOI status:

FACTS

Printed supplements, enclosures or inserts are commonly distributed by being inserted loosely in newspapers. Questions have arisen on the sales tax classification of such goods when placed into the host publication.

2. Printed supplements, enclosures or inserts are usually designed to advertise the advertiser's products. The advertiser (or his agent) makes arrangements for printing and subsequent enclosure into the host publication in a number of ways. For example -

(a)

The advertiser may contract with a printer for the printed matter to be supplied to the publisher, the publisher receiving a separate fee for the insertion.

(b)

The advertiser may contract with the publisher for advertising space and then arrange for the printed matter to be produced by a printer. The printer then invoices the publisher for the printed matter and in turn the publisher is reimbursed by the advertiser for the cost of printing plus insertion fee.

(c)

The publisher prints, or arranges for the printing of, the goods under a contract with the advertiser which provides for payment to include an insertion fee.

RULING

3. A supplement, enclosure or insert which is printed on different paper in a different size to the newspaper in which it is being distributed is not a newspaper in itself and it does not form part of the newspaper. It must be classified for sales tax purposes in its own right. Where the enclosure is printed matter of an advertising nature it will be taxable at the general rate. However, some supplements or enclosures which are not advertising matter may qualify for exemption in their own right under item 51 in the First Schedule to the Sales Tax (Exemptions and Classifications) Act.

4. Turning to the examples given above, (a) to (c), irrespective of how the printing of the supplements, etc is arranged, there is a retail sale of such material. It is not accepted that the supplements, etc are sold with the newspaper for the purposes of section 3(5) of Sales Tax Assessment Act (No. 1). In the case of -

(a)

there is a retail sale of the supplements, etc. from the printer to the advertiser who applies the supplements, etc to his own use in handing them across to the publisher for distribution.

(b)

the publisher arranges for the collection of the printing and distribution of the advertising material in accordance with the contract he has with the advertiser. It is a retail sale of the material from the printer to the publisher who again merely distributes the goods or alternatively it is a retail sale of the material from the printer to the advertiser, the publisher acting as agent for the advertiser.

(c)

there is a retail sale, or deemed sale under section 3(4), Sales Tax Assessment Act (No. 1) of the printed goods from the publisher to the advertiser.

5. Provided supplements, etc are not exempt under item 51, First Schedule, tax is payable on those supplements, etc which are supplied in the instances set out in paragraphs (a), (b) and (c).

COMMISSIONER OF TAXATION
30 January 1986

References

ATO references:
NO ST 11/31 P6

Date of effect:
Immediate

Subject References:
SUPPLEMENTS
ENCLOSURES
INSERTS

Legislative References:
SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) ACT ITEMS 51
AND 54, FIRST SCHEDULE.
SALES TAX ASSESSMENT ACT (No.1) SUB-SECTIONS 3(4)
and 3(5).